Snelling: Litigation & Risk
Business Services · FDD Items 3, 4 & 5
Moderate: Review
1 case disclosed in FDD Items 3 and 4.
FDD Items 3 & 4
Litigation Metrics
- Cases disclosed
- 1
- Total from FDD Items 3 and 4
- Bankruptcy (Item 4)
- None
- Franchisor or officer bankruptcy
- Verdict score
- 65 / 100
- FranchiseVerdict composite · higher is better
- Rating
- A
- A / B / C / D / F verdict grade
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Charge-off rate is the share of loans that were charged off or settled for less than the full balance.
- Total 7(a) loans
- 22
- Government-backed loans issued
- Charge-off rate
- 10.5%
- vs 16% franchise average
- 5-yr charge-off rate
- N/A
- Defaults
- 2 loans
- Loans charged off or defaulted
- Total loan volume
- $4.1M
- Avg loan size
- $186K
- Participating lenders
- 13
FDD Items 5, 6 & 17: What You Give Up
Contract Risk Indicators
- Mandatory arbitration
- Required
- Disputes resolved outside court, limits your legal options
- Jury trial waiver
- Waived
- You give up the right to a jury trial
- Non-compete
- 2 yrs
- Post-termination restriction on similar businesses
- Franchisor can compete
- Yes
- Franchisor can open competing locations in or near your territory
- Right of first refusal
- Yes
- Franchisor can match any purchase offer when you try to sell
- Governing law
- South Carolina
- State whose law governs disputes. Relevant if you're not based there
Extracted from FDD Item 3
Litigation Detail
Case No. 2021544173: HQ Franchising Corporation and Hire Quest, LLC v. Tardis Staffing, LLC, James Seale, Jade Holdings, Raider Staffing, Franklin Capital Holdings, and Capital Source Group. Filed April 28, 2021 in 237th District Court, Lubbock County, Texas. Claims: Breach of Contract, Misappropriation of Trade Secrets, Breach of Duty of Good Faith and Fair Dealing, Conversion, Tortious Interference with Contracts, and Aiding and Abetting. Former franchisee Tardis Staffing and owner James Seale allegedly converted franchise receivables and violated non-compete covenants. Settled June 4, 2021 via Consent Judgment and Permanent Injunction. TRO Defendants (Tardis, Seale, Raider, Jade) agreed to pay $35,000 and comply with injunction terms. Defendants Franklin and Capital settled via confidential settlement agreements. Forbearance Agreement remains in effect.
What drove the 65/100 verdict
Risk Score Breakdown
- 01HIGHOne litigation matter (franchisor as plaintiff vs former franchisee, routine commercial)
- 02MEDPositive net worth $64.8M, net income $3.67M, Item 19 disclosed, audited
Severity inferred from FDD text. Not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice. Consult a franchise attorney before signing any franchise agreement.